Environmental Engineering Reference
In-Depth Information
TC p
TC hp
TC cc
Transaction costs
c 1
c 2
Care-intensity
Threat to resource
Measurement costs
Source:
Birner and Wittmer (2000).
Figure 5.2
Comparative ei ciency of dif erent governance structures
initiatives like biodiversity conservation. The graph tries to deal with
'public relevance' attributes of transaction costs as described in the previ-
ous section. This specii cally represents the resulting ei cient governance
structure in relation to the variable costs. Hybrid private sector govern-
ance is assumed to have the lowest transaction costs for low values of
variable costs because (1) decision costs are low, (2) there is no need to
overcome collective action and coordination problems and (3) a private
enterprise can typically use stronger incentives than the state (Birner and
Wittmer, 2000). The i gure demonstrates that contracted or regulated
private sector governance is comparatively ei cient if c is smaller than
c 1 , pure state governance is comparatively ei cient for c 1 , c , c 2 and co-
management (public and collective action sector) is comparatively ei cient
if c . c 2 (Birner and Wittmer, 2000).
At this particular juncture, it is relevant to show how ei ciency of gov-
ernance structure is inl uenced by the level of state capability and social
capital. This relationship is presented in Figure 5.3. As I noted earlier,
social capital is very productive since it makes possible the achievement of
certain outcomes that would not be attainable otherwise. Peer monitoring
can considerably reduce the cost of monitoring and this is one reason why
local informal institutions of resource management are able to perform
better than centralized government-mandated institutions (Aggarwal,
2000). The transaction costs of hybrid private governance and of state
governance increase more rapidly with increasing values of variable cost
if state capability is low. Experience from dif erent parts of the world
 
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